The SEC’s Division of Examinations has released its priorities for fiscal year 2026, signaling intensified oversight of broker-dealer practices. The examination roadmap reveals particular attention to emerging areas like extended hours trading, complex product recommendations, and the implementation of Regulation Best Interest, reflecting the agency’s effort to keep pace with rapid market structure changes.
“Changes in the U.S. capital markets and at the SEC present new opportunities for growth, innovation and refinement of our approach to delivering on the Commission’s mission,” the Division stated, while emphasizing the need to “continue to adapt to evolving market forces to ensure the Division’s mission is met.”
For the first time, the Division explicitly identifies “broker-dealer trading practices associated with extended hours trading” as an examination priority. As overnight and pre-market trading expand beyond traditional hours, regulators are making clear they intend to scrutinize how firms handle these sessions.
The focus comes as multiple venues have launched or announced 24-hour trading capabilities, and retail participation in overnight sessions has grown significantly. The Division’s attention suggests examiners will assess whether broker-dealers have appropriate controls, disclosures, and execution practices for trading outside standard market hours—when liquidity is typically thinner and price discovery more challenging.
Broker-dealer equity and fixed income trading practices continue as a Division priority, with examinations reviewing order routing and execution. The Division will examine “best execution; the pricing and valuation of illiquid instruments such as variable rate demand obligations, other municipal securities, and non-traded REITs; and disclosures regarding order routing and order execution information, including as required by Rule 605 under Regulation NMS.”
Multiple law firms identified extended hours trading as one of the three main areas where the 2026 priorities differ from prior years, alongside information security/privacy and technological advances.
For example, Mayer Brown, an international law firm, highlighted extended-hours trading as one of the “New Product- and Service-Specific Focus Areas,” noting that “The 2026 Priorities expressly reference prime brokerage activities and extended-hours trading, among others, as specific focus areas.”
In addition, a full-service law firm, Katten Muchin Rosenman noted that extended hours trading is one of three main areas where the priorities alter focus from the prior year. They specifically commented: “The Priorities focus on extended hours trading, including risks (e.g., potential lack of liquidity, limited price discovery, etc.) to customers of trading during these times.”
The firm also observed that the Division takes “a proactive view of technology and industry-wide innovations, specifically referencing generative artificial intelligence (AI), automated investment tools, automated advisory services and extended trading hours. The focus here is consistent with the SEC’s approach to foster innovation in the US financial markets.”
The Division will also examine alternative trading systems, focusing on “compliance with the requirements to have written safeguards to protect subscriber confidential information under Rule 301(b)(1) under Regulation ATS, alignment with their descriptions in the Form ATS-N, disclosures, and risk controls.”
Khody Azmoon, CEO and co-founder at BLOX Markets, noted the breadth of the Division’s trading oversight: “Broker-dealer equity trading practices continues to be a division priority which includes extended hour trading, best execution, Rule 605, Reg SHO, and alternative trading systems.”
“For alternative trading systems, they are paying particular attention to whether they maintain the written safeguards required by Rule 301(b)(1) of Regulation ATS to protect subscriber confidential information, they are consistent with what they describe in Form ATS-N, disclosures, and risk controls. It will be interesting to see if ATS private rooms receive regulatory scrutiny given the lack of transparency,” he told Traders Magazine.
The Division continues intensive examination of broker-dealer compliance with Regulation Best Interest, particularly around recommendations involving complex or tax-advantaged products.
Examinations will focus on “those recommended products that are complex or tax advantaged, such as variable and registered index-linked annuities; ETFs that invest in illiquid assets such as private equity or private credit; municipal securities, including 529 Plans; private placements; structured products; alternative investments; and other products that have complex fee structures or return calculations.”
The Division will assess “conflict identification and mitigation practices, in particular with respect to recommendations of accounts, rollovers, and recommendations involving limited product menus” along with “processes for reviewing reasonably available alternatives” and how firms satisfy the Care Obligation.
For dual registrants operating as both broker-dealers and investment advisers, examinations will review “account allocation practices (e.g., allocation of investments where an investor has more than one type of account) and account selection practices (e.g., brokerage versus advisory, including when rolling over employer plans to an IRA or transferring an existing brokerage account to an advisory account).” The Division will also review Form CRS disclosures, checking how firms describe their services, fees, conflicts of interest, and disciplinary history.
The Division maintains its focus on broker-dealer financial responsibility, examining compliance with net capital rules and customer protection requirements. Examiners will assess “operational resiliency programs, including supervision of third-party/vendor-provided services that contribute to the records used to prepare financial reporting information.”
Risk management gets particular attention, with examiners evaluating “credit, market, and liquidity risk management controls to determine whether firms have sufficient liquidity to manage stress events.” Cash sweep programs and prime brokerage activities will also be examined, with focus on concentration, liquidity, and counterparty credit risks.
The Division will continue examining national securities exchanges and conducting “risk-based oversight examinations of FINRA” through a process “designed to identify those aspects of FINRA’s operations important to the protection of investors and market integrity, including FINRA’s implementation of investor protection initiatives such as Regulation Best Interest and Form CRS.”
